Defending Yourself Against Online Fraud

JUN 06, 2014

Online fraud is similar to other types of fraud in that it can result from thieves using deception for financial gain. The primary difference is the medium. Online fraudsters use techniques such as phishing, malware and tab nabbing to convince you to reveal your essential financial information electronically. Fighting online fraud is important because online fraud can result in significant financial losses and damage to your credit, which can take time and effort to recover.

Types of Online Fraud

While no one anticipates being a victim of identity theft, the fraudsters’ methods to get information have become increasingly sophisticated. Phishing is one of the most common methods of online fraud. In a phishing attack, criminals send out phony emails that look similar to communications from legitimate entities, such as your bank or insurance company. The email will “fish” for information by asking you to confirm your personal data, such as your Social Security number or bank account number.

Another tool for fraud is malware, a type of malicious software that criminals can install on your computer when you click on a pop-up window or other Internet link that may seem legitimate. Tab nabbing occurs when fraudsters gain access to one or more of the tabs open on your Internet browser and fool you into providing login information to various websites.

Damage from Online Fraud

If you’re scammed into providing information about your bank account or debit card, criminals can use that information to tap into your account and take whatever you have there. With credit card information, fraudsters can run up charges until either you or your credit card company gets wise to it. You could also face black marks on your credit report if thieves open accounts in your name or run up your cards over your credit limit.

Protection against Online Fraud

One of the best ways to protect yourself against online fraud is to avoid providing information to unknown sources. If you can’t tell whether a site is legitimate, don’t hesitate to call your bank or credit card company for verification.

Many banks will allow you to set up alerts notifying you of any suspicious transactions, such as charges out of your typical spending pattern or over a certain dollar amount. Taking advantage of these systems can be an excellent defense. Regularly checking your financial statements and credit reports can also help detect unauthorized activity. You can generally check your financial accounts online to get real-time updates on any activity.

Actions to Take After Online Fraud

If you’ve fallen victim to online fraud, you should take immediate action can help prevent long-term damage. According to FTC.gov, an important first step to take is to place an initial fraud alert on your accounts. This will last for 90 days and will notify potential creditors that your identity must be verified before an account can be opened in your name.

Another option is to review your credit report and see if theres any suspicious activity listed. In identity theft cases, you may also want to file an identity theft report, which includes a police report. An identity theft report can help prevent debt collectors from pursuing unlawful debts in your name, help you correct inaccurate information on your credit report, and place an extended fraud alert on your credit report.

About the AuthorJohn Csiszar began writing in 1989 and his work appears in various online publications, including The Huffington Post. Csiszar earned a B.A. in English from UCLA and served 18 years as an investment adviser and certified financial planner.

This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.